India working on 5-point crypto legislation as ban is ruled out

India working on 5-point crypto legislation as  ban is ruled out

India is working on a crypto regulatory framework based on the joint recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB) that could result in legal legislation in the next 5-6 months. Siddharth Sogani, the CEO of CREBACO that has worked with government agencies and ministries, told Cointelegraph that the Indian government is working on a five-point crypto legislature with a global approach.

India recently concluded the G20 summit on a high with several key economic announcements, however, the most notable decision for the crypto community came in the form of IMF-FSB joint recommendations for crypto regulations that India and other G20 nations welcomed.

The IMF-FSB crypto recommendations call for regulating the crypto market rather than a blanket ban approach. The IMF-FSB recommendations are a set of regulatory guidelines/suggestions that the G20 countries can work on to formulate their independent yet collaborative crypto legislative.

Cointelegraph reached out to CREBACO, a blockchain analytic firm that offered consulting services to several G20 committees and nations to get insight into India’s crypto approach. Sogani, the CEO of the firm told Cointelegraph that based on their meetings with the government officials, India is currently working on a five-point regulatory approach with a focus on global collaboration on certain aspects such as crypto taxation.

Talking about the five-point framework, Sogani noted that the government is focusing on:

  1. Setting up advanced Know Your Customer (KYC) for crypto companies which covers the Foreign Account Tax Compliance Act (FATCA), and Existing anti-money laundering Standards.
  2. Crypto platforms would be required to release Proof-of-reserve audits on real real-time basis to regulators.
  3. A uniform taxation policy across the nations.
  4. Crypto exchanges could gain the similar status of authorized dealers (similar to banks) under the guidelines of the Reserve Bank of India (RBI).
  5. Key positions may be mandatory such as Money Laundering Reporting Officer (MLRO) for crypto platforms.

Sogani noted that the world has realized that banning crypto is futile and several nations are moving towards a regulatory approach rather than a blanket ban. The likes of the United States and Europe have already got some specific crypto regulations in place while India took the taxation route. He added: 

“Regulations are inevitable, this ecosystem has grown substantially strong without regulations. Just imagine how well would it grow with proper regulations in place. Also, regulated markets reduce the risks of scams and illicit activities.” 

India has called for a global approach to crypto regulations for a while, with Prime Minister Narendra Modi reiterating the same during the recently concluded G20 summit. One of the executives at the Finance Ministry confirmed that they have taken the IMF-FSB crypto recommendations and will focus on formulating regulations around it in the coming months.

Related: India G20 confirms ‘active discussions’ around global crypto framework

The Finance Ministry executive said that IMF-FSB recommendations offer a good “framework to decide our own way forward. The foundation is ready, beyond that how much we want to go it is for us to decide in the coming months and then take a call.”

The official also cleared that banning cryptocurrencies is no longer an option and noted that “If you want to ban it (cryptocurrency), go ahead and ban it. But if the rest of the countries are not banning it, it will be extremely difficult for one country to ban it.”

India currently doesn’t have any specific crypto regulations in place, though the country imposed a 30% tax on crypto gains in 2022. However, the joint crypto recommendations and the Finance Ministry’s assurance that a crypto framework could materialize into a formidable legislation in the coming few months is an optimistic sign for the crypto industry in the country.

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